Karen Young
Mr. Reuter
Economics
9 February 2014
Cost of Public versus Private Universities
With an even more competitive job market after the 2009 recession, many students are recognizing the value of a post-secondary education in order to boost their value to possible employers. The difficulty in the decision lies not in the choice to attend college, but rather the choice between attending a private or public university. Although all students hope to attend their dream college, the scarcity of money often impacts their decision on which school they will attend.
People traditionally expect private universities to be more expensive than public colleges, because the private schools do not receive state aid. Also, the more selective universities have historically been more expensive than less selective schools, with a high percentage of the selective universities being private schools. Therefore, the public often correlates expensive tuition with private schools. With varying levels of scholarships and financial aid, however, the cost of a private university can equal or be less than that of a public college. Gary Hoffman explains how being a competitive and talented student can severely lower the cost of a private school in this video:
Due to the high percentage of “gift aid” given at private colleges, the expense will decrease drastically for those very qualified students. Gift aid represents money given to a student by a college that they will never need to pay back. For others who do not qualify for the same financial aid, private universities remain significantly more expensive than public universities – for a student who hopes to attend a private university, the opportunity cost of attending a public school for much less money may seem very appealing. According to Mandi Woodruff of Business Insider, “Tuition and fees for a public four-year institution cost $20,823 for the 2011-12 school year –– about $8,000 less than private institutions” (Woodruff). By offering a quality education for much less money, the public colleges decrease the marginal cost of postsecondary education without decreasing the marginal benefit. Although the class sizes might be a little bit bigger, for many students, public schools carry the best advantages. 
If public schools offer cheaper tuition for a very similar education, how do private schools attract any students at all? In the New York Times article, Getting Out of Discount Game, Small Colleges Lower the Price, David Warren offers an insightful comment: “Schools wanted a high tuition on the assumption that families would say that if they’re charging that high tuition, they must be right up there with the Ivies… so schools would set a high tuition, then discount it” (Lewin). By attending a private university, many students believe that they are increasing their human capitol by a larger amount than had they attended a public university; they hope that in leaving college with greater human capitol, they will seem more attractive to potential employers, and therefore have more stability in the job market. As seen in the image above, Yale University was a more expensive institution than the public University of Connecticut, but Yale graduates had higher paying jobs after college that would help to repay the loans of school. When weighing the marginal benefit of a private school against the marginal cost, one must look into the future in order to gain a realistic view of money gained by attending a private college.
The decision to attend a private or public college differs for every person, depending on their family, financial status, and personal values. Although private colleges have been historically more expensive, “many private colleges are rethinking their pricing – whether cutting or freezing tuition, or locking in the freshman tuition for all four years” (Lewin). A student should research all of the academic and social opportunities at both private and public colleges and then look into financial aid and scholarships in order to pay for the colleges. As we approach the end of our senior year, it is important that we compare our options for next year. Both public and private universities offer unique advantages; it is up to us to look at the marginal benefit and marginal cost of our decision and compare it to that of the opportunity cost so that we can choose the college that will help the us grow and mature into the best citizen we can be.
Works Cited:
Jacobs, Deborah L. "Public Or Private College. Is The Outcome Any Different?" Forbes. Forbes Magazine, 02 Oct. 2013. Web. 1 Feb. 2014.
Lane, Finn. Public Versus Private College Cost. Digital image. The Digerati Life RSS. June Tree, 23 Dec. 2009. Web. 01 Feb. 2014.
Lewin, Tamar. "Getting Out of Discount Game, Small Colleges Lower the Price." The New York Times. The New York Times Company, 25 Dec. 2013. Web. 1 Feb. 2014.
Public vs. Private Schools: Real Cost May Surprise You. Dir. Gary Hoffman. Perf. Gary Hoffman. YouTube. YouTube, 25 Mar. 2012. Web. 01 Feb. 2014.
Woodruff, Mandi. "Public Vs. Private College: Which Is Better for Your Wallet?" Business Insider. Business Insider, Inc., 22 May 2013. Web. 1 Feb. 2014.
Karen, this was a really helpful article since even most of the juniors are starting to look at schools. I thought it was really interesting how private schools will sometimes raise their prices to make it seem like you are getting an education similar to what you would get at an Ivy League school. Do you see anywhere if there was a difference in how well students did and how much they learned between private and public schools? That might explain why private school students have the higher median starting salary.
ReplyDeleteI really enjoyed reading your blog article Karen! I'm also looking to a private and public school for college. It was really interesting to read that one of the reasons students want to chose a private school that costs a lot of money is because they think it looks better in a company's point of view. It is true that even though the cover sticker price for private schools is very expensive you usually get generous financial aid. It is also interesting to see that the median salary is a little higher for students coming out of private Ivy League schools after college. Great job and it was a joy to read!!
ReplyDeleteThis is a very interesting post. I know how financial aid can be a huge deciding factor in which school you go to because of my brother. He had narrowed it down to two schools, one public and one private, and ended up going with the private school because after aid, it was cheaper than the public university. I also found it interesting in the Yale/University of Connecticut comparison how Yale was more than twice as expensive, yet the median starting salary was only about 15% more.
ReplyDeletePrivate institutions are in fact higher in price, but as was pointed out, the opportunity cost of paying more money to the private school balances out in the jobs those students will have. Granted there are private religious schools that offer much better religious programs that are high tuition schools but training to be a pastor isn’t the highest paying job either; but no one could go to a public school and get a Christian education if they wanted it. The cost was certainly taken into consideration in this post, and I’m positive it all evens out like the graphs show.
ReplyDeleteI agree with Brady on how interesting of a post this really is. There are a few reasons why i believe private schools are able to attract so much attention and people. One reason would be because it will look good on any job resume and an employer is more likely to hire a Harvard graduate than someone from a less prestigious school
ReplyDeleteWhen looking at public and private schools, like Karen said, a few things come into perspective. Depending on the students desire it is important to first determine what is most important to them when going to school. Whether it is social interactions, the quality of the education, or the cost of attending; all of these are put into thought before choosing a private or public school. One very interesting point I thought Karen made was the evidence given in the image. Karen explained how most students expect that they will earn a greater salary when coming out of a private school, however I agree, that students need to put in perspective the difference in cost of both schools to that starting salary. Overall, I believe public schools are really the way to go when choosing a college, socially and financially, I believe that gambling on a discount isn’t worth losing the experience of a public school.
ReplyDeleteI'd be interested to see whether non-Ivy League private school graduates received the same employment benefits as the Ivy Leaguers do. A lot of private schools may have a similarly high sticker price, but not be so well-known-- and I doubt most of these employers are hiring prestigious-sounding applicants because they're genuinely more qualified.
ReplyDeleteWhen comparing public and private schools this article does not take in to consideration the differences on a city by city basis. Some cities have worse public schools than others and that would drive people who can afford it to a private school in that city. If the public schools have a good reputation then it makes less sense to attend a private school. However, it is important to note that the perception is that private schools mean a better education and therefore should mean more money for private school graduates. There should be a study to prove or disprove this.
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